The president of Mexico announced an agreement with Constellation Brands last week to build a new brewery in the southeastern part of the country, according to Reuters.
During his regular morning news conference on Friday, May 28, President Andrés Manuel López Obrador made the announcement but offered no details on the exact location of where the brewery will be constructed. However, he noted the plentiful water supply in the southeastern part of the country.
A spokesperson for Constellation Brands did not confirm the deal, but said conversations with the country are ongoing.
“Consistent with our previous statements on this topic, we continue to engage in constructive discussions with the Mexican government as it relates to our long-term plans for production in Mexico,” the spokesperson told Brewbound. “Together with government officials, we’re exploring options that include finding an alternative location in the southeast region in Mexico that has adequate water supply and a skilled workforce.”
The news comes one year after Constellation — maker of popular import brands Modelo, Corona and Pacifico — was forced to halt construction on a brewery in the northern Mexico city Mexicali. The $1.4 billion project was rejected by voters in May 2020 after farmers and activists argued it prioritized beer for Americans over limited water resources for the region, according to Mexico Now.
Following the Mexicali construction shut down, Constellation said it would “be unable to use or repurpose this site for future use,” recording an impairment charge of about $650 million to $680 million in its first quarter 2022 earnings report.
“The company will continue to work with government officials in Mexico to pursue various forms of recovery for capitalized costs and additional expenses incurred in establishing the brewery,” the company said in a release.
Constellation reported $6 billion in net sales for 2021 in their latest full-year earnings report — an 8% increase from the year before. Modelo Especial became the third best-selling beer in the U.S., with 145 million cases sold last year.
Year-to-date through April 18, Constellation Brands is the third best-selling, off-premise beer category vendor, with dollar sales up 15.1%, to more than $1.75 billion in multi-outlet and convenience stores tracked by market research firm IRI.
Flagship offerings Modelo Especial (+18%, $757.6 million) and Corona Extra (+11.3%, $582.1 million) are the No. 3 and No. 6 best-selling beers, respectively, in U.S. off-premise retailers through mid-April, according to the firm.